Buy-side hit out against MiFID II reporting rules

Firms including BlackRock, Citadel and Amundi have demanded further clarity on the reporting of certain types of transactions.

Some of Europe’s largest buy-side firms have criticised proposed trade reporting rules set out in MiFID II, stating that greater clarity is needed for reporting derivatives.

In a response to the European Securities and Markets Authority (ESMA) on the proposed requirements, BlackRock demanded greater clarity over how cleared derivatives trades are reported to regulators.

“We would appreciate confirmation that for exchange traded derivatives and cleared trades, we do not need to report the trade with the executing broker if it is given up to the clearing member on trade data,” BlackRock stated.

Similarly Citadel said it requires further guidance from ESMA on how to report cleared OTC derivatives, such as interest rate swaps.

“The CCP associated with the cleared OTC derivative affects the quoted price of the instrument and therefore should be included in the transaction data reported to regulators and the public,” Citadel said.

“In addition, RTS 22 is unclear regarding how to report the CCP associated with a cleared OTC derivative.  We urge ESMA to provide additional guidance regarding how to report this important piece of information.”

Amundi, Europe’s largest asset manager, also said ESMA should take a more “transversal” view to trade reporting.

Rather than asking for one individual reporting for each regulation, Amundi said regulators should “innovate and investigate the possibility to create a global data warehouse.”

Regulators could download data from the warehouse and “find what is of interest to them”, Amundi stated.

State Street also questioned whether discretionary accounts are subject to transaction reporting.

It said: “We believe that it should not be subject to transaction reporting since regular open-ended collective investment schemes do not affect the market in the same way as an ETF or other security, so the motivation for reporting based on detecting abusive behaviours, price discovery or identification of risks to market integrity is not as valid.”

Furthermore, Deutsche Bank called for an exemption to reporting the transfer of non-cash collateral.

“Non-cash collateral movements should not result in transaction reports because: collateral exchanges do not constitute a “transaction” as there is no true “acquisition” or “disposal” within the meaning of Articles 2(2) and (3) of RTS 22,” it said.

“It is not clear why that has been omitted from the list of exemptions in Art 5 of RTS 22, but we do not think that infers an intention that they now be included.”

Earlier this week the European Parliament approved the one year implementation delay to MiFID II, which will now come into effect in January 2018.